Brent crude tumbled $US2.61, or 5 per cent, to $US50.04 per barrel on Monday night in its biggest percentage fall since the start of September. It is currently trading at $US50.36 per barrel.

This dramatic drop followed a surge last week that took Brent crude to an 11-week high of close to $US54 per barrel.

Analysts blamed profit-taking for the fall and a report that OPEC continued to boost crude production despite a persistent glut.

"After an 8 per cent rally last week and a move up to the 200-day moving average at $US51, crude oil has just gone too far too fast and a pull back today was to be expected," said Phillip Streible, senior market strategist at Chicago-based RJO Futures.

ANZ analyst Daniel Hynes said the volatility in the oil market is set to continue. Periods of bottom-picking always tended to produce volatility, he said.

Brent crude dropped to a six-year low of $US42 a barrel in August, from a peak above $US115 in June 2014, before recovering to present levels.

"There's heightened sensitivity to the data coming out just now," said Mr Hynes. "The data has been volatile.

"There's tentative signs of some bottom-picking, or at least trying to position for an upturn, and that always gets a lot of false starts."

He said oil would come under particular pressure in the first quarter of 2016 as oil started to flow from Iran following the lifting of sanctions.

ANZ are currently expecting Brent crude to reach $US44 a barrel at the end of the first quarter in 2016, he said.

"We can't rule out a fresh low," he said. "We see $US44 as the cyclical low for this period."

In the longer-term, however, oil would gradually increase, with ANZ tipping $US50 a barrel by the end of 2016.

UBS analyst Nik Burns agreed that oil's medium-to-long term trend was up, but he declined to call a short-term bottom.

"Has oil hit the bottom today, not to go lower over the next six to 12 months? I can't make that call," he said.

"But in the medium to long term I'm as confident as I can be that it is going higher.

"All signs are pointing to a tightening in the global demand/supply balance in the next 18 to 24 months so our view is that significantly higher oil prices are required in the medium to long-term to justify investment to produce more oil to meet demand."

UBS are not making any end-period forecasts for the the commodity, instead predicting an average price of $US57.50 per barrel for Brent crude through 2016, lifting to $US80 by 2019.

Crude prices were pressured on Monday when secondary sources cited in OPEC's monthly report said the group pumped 31.57 million barrels per day in September, up 110,000 from August and almost two million more than its demand prediction for this year.

OPEC trimmed its estimate of 2016 world oil demand growth by 40,000 barrels per day to 1.25 million barrels per day, citing slower growth in China.

"The OPEC demand forecast for 2016 ... suggests some concern about the strength of demand next year. We are primarily wary of this risk," said Richard Hastings, macro strategist at North Carolina-based Global Hunter Securities.

"All of it puts a rebalancing phase deeper into 2016," Hastings added.

Kuwait Oil Minister Ali al-Omair said there were no calls within OPEC to change the production policy and that lower output from high-cost producers could support prices in 2016, adding to signs OPEC will keep its strategy of defending market share.

– with wires